But on niche websites devoted to energy production and energy markets, the picture of how California is responding to its mandates is more muddled. A recent free report from SNL, the McGraw-Hill financial publication that typically charges for the proprietary information it provides to shareholders and potential investors, puts California’s progress in a different light:

Carbon laws are choking demand for coal-fired power in California, but the state still imports a large amount of coal-based power and is one of the nation’s top industrial users of coal, providing a needed market for Western producers facing dimming prospects elsewhere.

 

California’s carbon law AB32, which requires the state’s greenhouse gas emissions to return to 1990 levels by 2020, sets in-state plant performance standards that are too stringent for conventional coal units. But California is still importing coal-based power from neighboring states until current power purchase and plant ownership contracts expire.

 

In 2014, less than 5 percent of California’s total energy demand was served by coal and petroleum coke-fired plants, nearly all of it from plants outside the state, according to an Oct. 12 report from the California Energy Commission. By 2026, California will end virtually all its reliance on coal.

 

But at times, as much as 50 percent of Southern California’s electricity still comes from coal-fired plants, Steve Homer, director of project management for the Southern California Public Power Authority, or SCPPA, told SNL Energy.

 

The three main out-of-state coal plants serving California — the Intermountain Power Project in Utah, the San Juan plant in New Mexico and the Navajo plant in Arizona — together received 10.1 million tons of coal in the first seven months of 2015, according to U.S. Energy Information Administration data. …

 

California is also one of the country’s biggest industrial users of coal, although consumption for that sector is relatively small. In 2013, the latest year for state-level EIA data on industrial coal consumption, California was the eighth-biggest industrial coal user, burning 1.4 million tons.

How states game energy reports

The report is another interesting example of how states play games with energy exports and imports to make themselves look greener than they are. In 2010, Orange County lawmaker turned Austin policy wonk Chuck DeVore laid out how California and British Columbia benefit from this maneuvering:

California has become America’s largest electricity importer. With 37 million people producing about 13 percent of the U.S. gross domestic product, California imports about 23 percent of its electricity.  …

Complicating matters are a trio of California energy policy laws passed in 2006: AB32, SB1368 and SB107. AB32 mandates a 30 percent reduction in California’s greenhouse gas emissions by 2020 … . SB1368 outlaws the renewal of coal-fired electricity contracts — imported coal energy powered about 16 percent of California’s grid in 2008. While SB107 accelerated the requirement that California derive 20 percent of its electricity from renewable sources [in 2010], renewable being defined as small hydro, geothermal, wind, solar and biomass (we missed the target, meaning utilities, read ratepayers, get dinged).

Enter government-owned BC Hydro and its Powerex subsidiary. With abundant hydro power potential, British Columbia is seeking to become the Saudi Arabia of “green” energy.  … [But] in fact, BC Hydro has imported more energy than it has exported in 10 out of 11 years.

What’s going on here? British Columbia sells its clean hydropower to neighboring governments which need to meet renewable energy mandates. But then it doesn’t have enough power for its growing economy, so it imports power from coal and gas-fired power plants in Washington state and Alberta.

A California compromise — or a loophole?

A 2014 Los Angeles Times story raised similar questions about the gaming of the intention of the state’s landmark climate change laws. Its key conclusion:

California regulators say they have taken steps to prevent utility company executives from outwitting them and insist state rules will lead to real reductions in carbon dioxide, the main gas scientists blame for global warming. But officials concede their efforts have run up against the limits of California’s ability to control what takes place outside its borders, a point the utilities also emphasize. …

Originally, California’s climate-change policies included a provision that would have demanded utility executives swear under penalty of perjury that the actions they took to reduce emissions would not result in a spike in greenhouse gases someplace else.

 

But federal officials warned Gov. Jerry Brown that too aggressive an effort to control emissions across state lines would risk disrupting the complex interstate electricity system.

 

In the end, the California Air Resources Board — which oversees the state’s 2006 climate-change law — allowed utilities a dozen “safe harbor” conditions under which electricity companies would be permitted to shift emissions to nearby states.

 

Critics called the conditions loopholes. …

 

The exemptions are so broad, the board’s own advisory committee cautioned, that all the reductions in greenhouse gas emissions made by electricity companies could end up existing only on paper.

That could be the watchword for Sacramento this week, as leading Democrats in the Assembly and the Senate labored on a spending plan that could survive the governor’s scrutiny.

Equipped with a line-item veto, which allows him to knock out provisions after they’re passed without scrapping a budget in its entirety, Gov. Jerry Brown has once again taken a more cautious stance on spending than his colleagues in the state Legislature, with far less allocated for state-subsidized child care, Medi-Cal and welfare recipients.

But many Republicans agreed once again that Brown’s circumspection didn’t go far enough.

Although profligate Democrats have been frustrated before, Brown’s political position has become unshakable. As he has headed into his fourth term, he has maintained a high public approval within his party — despite growing anxiety over the drought — to stave off a rebellion on spending. Democrats haven’t unified enough to override Brown with a two-thirds vote, Bloomberg Politics noted.

Dueling projections

Democrats have pushed to hike California’s budget even higher than the $115.3 billion Brown offered in his revised plan last month — a sum which “was already $7.3 billion larger than the budget enacted in June for the current fiscal year,” according to the Los Angeles Daily News. “And it reflected a $6.7 billion increase in projected general-fund revenues compared to the proposal he released in January.”

Democrats blamed overly cautious revenue estimates for Brown’s unwillingness to loosen the purse strings. “As in previous years, the disagreement revolves around the question of how much money is available for spending,” the Los Angeles Times observed. “The lawmakers’ budget plans are built with numbers from nonpartisan legislative analysts, whose revenue estimates are higher than the Brown administration’s. Even though revenue has routinely outpaced the governor’s expectations, Brown has continued to insist on the lower figures.”

That brought a swift rebuke from Brown’s camp. “H.D. Palmer, spokesman for Brown’s Department of Finance, confirmed that the governor has not reached a deal on spending with lawmakers,” the Times reported. “The Legislature is aware of our concerns with their higher revenue numbers, which is built on the most volatile revenue source there is, which is capital gains,” he told the Times.

Republican resistance

Over the past decade, income taxes have risen and fallen by the billions, as California has experienced unexpected twists and turns, including the global financial crisis and the latest Silicon Valley boom. In a recent speech, Gov. Brown argued against the kind of social psychology that could exacerbate the impact of adverse events. “The longer you’re away from a recession, the less you remember it and all you see is money coming in,” he said. “Usually at the point when the recession is right around the corner and people are feeling the best ever and they want to just spend, we crash.”

But Republicans cautioned that Brown’s tilt toward thrift did not go far enough. Former Assemblyman Chuck DeVore, R-Irvine — now vice president for policy at the Texas Public Policy Foundation — warned that the Golden State’s financial position couldn’t withstand another downturn. “California’s heavy reliance on a highly progressive income tax, with the nation’s highest top marginal rate at 13.3 percent, makes the state subject to massive swings in revenue as wealthy taxpayers realize capital gains or receive bonuses or stock options,” he wrote. “The challenge is in tempering budget growth in the face of historically wild swings in the state’s income tax revenue.”

Republicans faced their own challenge, however, centered around how else to structure California’s tax code. As the Los Angeles Times editorial board conceded, the state’s highest-in-the-nation income tax rate discouraged economic growth. “But reformers face a problem too,” it concluded: “Any move to stabilize revenue by de-emphasizing income taxes would appear to shift the burden from the wealthy onto everyone else. In a blue state acutely sensitive to income inequality, that’s a non-starter.”

California’s pioneering climate-change law has a long reach, but that doesn’t mean all its mandates will help stave off global warming.

To meet the requirement that it cut carbon emissions, for example, Southern California Edison recently sold its stake in one of the West’s largest coal-fired power plants, located hundreds of miles out of state.

But the Four Corners Generating Station in New Mexico still burns coal — only the power that Edison once delivered to California now goes to a different utility’s customers in Arizona.

Similar swaps are taking place at coal plants throughout the West, and they underscore the limitations California faces as it tries to confront climate change in the absence of a coherent federal plan.

Unilateral CA action never made sense for many reasons

This quandary was predicted by AB 32’s critics. California’s attempting to conquer climate change with unilateral action made little sense for one big reason — by itself it wouldn’t work, and only blindered greens would believe AB 32 would insipre the rest of the world to copy the Golden State. But there were also many other reasons to expect it would cause headaches. Such as …

Originally, California’s climate-change policies included a provision that would have demanded utility executives swear under penalty of perjury that the actions they took to reduce emissions would not result in a spike in greenhouse gases someplace else.

But federal officials warned Gov. Jerry Brown that too aggressive an effort to control emissions across state lines would risk disrupting the complex interstate electricity system.

In the end, the California Air Resources Board — which oversees the state’s 2006 climate-change law — allowed utilities a dozen “safe harbor” conditions under which electricity companies would be permitted to shift emissions to nearby states.

Critics called the conditions loopholes.

The board “was struggling with what it could do in enforcement,” said James Bushnell, a UC Davis expert in energy economics. “It was a tough issue.”

The exemptions are so broad, the board’s own advisory committee cautioned, that all the reductions in greenhouse gas emissions made by electricity companies could end up existing only on paper.

“If you use enough of those safe harbors, you can shuffle your way out of all your obligations,” said Severin Borenstein, a UC Berkeley economist who advised the board.

How California indirectly burns lots of coal

There are a lot of other AB 32-driven scams out there. Chuck DeVore has written for years about a similar assault on AB 32’s goals that state officials never talk about because they’d rather just pat themselves on the back because of the law’s symbolism and alleged glories.

California has become America’s largest electricity importer. With 37 million people producing about 13 percent of the U.S. gross domestic product, California imports about 23 percent of its electricity. This situation is compounded by the state’s environmental laws which, if a power plant can be built at all, typically consume seven years for permitting and construction vs. three years in competing Texas.

Complicating matters are a trio of California energy policy laws passed in 2006: AB 32, SB 1368, and SB 107. AB 32 mandates a 30 percent reduction in California’s greenhouse gas emissions by 2020 (BC Premier Campbell was particularly enthusiastic about this law). SB 1368 outlaws the renewal of coal-fired electricity contracts—imported coal energy powered about 16 percent of California’s grid in 2008. While SB 107 accelerated the requirement that California derive 20 percent of its electricity from renewable sources this year, renewable being defined as small hydro, geothermal, wind, solar, and biomass (we missed the target, meaning utilities, read ratepayers, get dinged). 

Enter government-owned BC Hydro and its Powerex subsidiary. With abundant hydro power potential, British Columbia is seeking to become the Saudi Arabia of “green” energy. California environmentalists don’t see the irony in British Columbia damming rivers to provide power to California, while in California, environmentalists fight to demolish dams as unsightly threats to salmon. 

The irony gets even deeper, though. British Columbia, perhaps due to Premier Campbell’s business-friendly tax and regulatory policies, is growing. That, combined with a severe drought (yes, when California gets a good water year, British Columbia often sees a drought) means that BC Hydro will be importing $220 million more electricity than it did last year. You read it correctly, hydro energy colossus British Columbia will be importing almost a quarter billion dollars more electricity this year than last. In fact, BC Hydro has imported more energy than it has exported in 10 out of 11 years. And, from where does this energy come? Washington State and Alberta Canada. And, what is the source of this electricity? Brace yourself. Coal and gas-fired plants.

DeVore: ‘Clean green’ and ‘dirty coal’ can’t be separated

That’s from Chuck’s 2010 article for Brietbart. It’s at least as juicy as the LAT’s weekend piece because it involves so much power.

I’ll give the state-assemblyman-turned-Texas-policy-wonk the last word:

Electrons in a grid, like dollars in an account, are fungible, meaning that “clean green” electrons cannot be separated from “dirty coal” electrons and both are mixed in with electrons from nuclear power plants. So, when the Premier of British Columbia comes to California to urge us to continue to make our state even more dependent on his province for electricity as we strive to make the planet better we shouldn’t fool ourselves. The fact is, BC Hydro is buying “dirty” power and then, in an act I’ll dub “electron laundering” is repackaging it for the silly, naïve, environmental-minded Californians as pristine green hydro power—with a nice mark up, of course (Canadians have to pay for their national healthcare after all). 

As is now well known, outmigration from California has reached historic highs. Although just 2.6 percent of the large Texas population is now Californian in origin, Texas has received the largest number of Californians from any state in absolute terms. As The New York Times reports, Texas is now home for almost 680,000 people born in California — a figure that excludes non-native Californians who picked up stakes and relocated to the Lone Star State.

Number-crunchers have not drilled down much into the demographic details of the California-to-Texas migration path. But it’s not hard to understand what kind of Golden Staters would be especially drawn to the move.

A successful jump to Texas is aided by factors such as a well paying job that can relocate or translate into the same or better employment. But cultural reasons are among the motives for a self-induced transfer. Californians capable of moving are apt to consider Texas because they are dissatisfied with their own state’s high taxation, high unemployment and extensive government intrusions.

The same holds true if they’re unhappy with the public education system, the legacy of illegal immigration, or the political party that has dominated California politics for years on end.

In short, California Republicans are especially primed to become Texans — and Texas, under Gov. Rick Perry, is especially primed to welcome them.

Playing the inside game

That sort of synergy is clearly no coincidence. But the connection runs even deeper than the cultural and political climate in the two states. The “new” Perry — the more confident, competent figure that emerged from the wreckage of Perry’s bungled 2012 primary campaign for president — is not quite as home-grown Texan as some might believe. Rather than digging down deeper into his home state roots, Perry turned for help to an outsider with a powerful political pedigree — in California.

His name is Jeff Miller, a consultant volunteering a full suite of services to Perry. Miller rose to prominence fundraising and advising former Gov. Arnold Schwarzenegger. He’s among the most plugged-in and well regarded of California Republicans. But, in a sign of the condition of his state’s party politics, Miller is making huge waves — and spending lots of time — in Texas.

As the Texas Tribune reported, Perry’s inner circle feels no shame in heaping praise on Miller. Described as a “perfect extension” of Perry, “the one that has the governor’s ear,” Miller is said to supply the “focus and leadership that was missing” in the Perry camp.

An alternate California

The strange consequence of the arrangement is that Rick Perry 2.0 has become something of a shadow governor of California. Not only is he acting the way a Republican running the state might act; he’s actively recruiting talent and leadership away from the Golden State — and not just in politics.

Jaws dropped, for instance, when Perry succeeded in luring Elon Musk’s SpaceX away from California — where credulous legislators in Sacramento bent over backwards to secure what critics described as the most flagrant kind of crony-capitalist tax deals. Assembly Bill 777 was hurriedly passed to secure a raft of tax exemptions for SpaceX activities, leading The Wall Street Journal to slam state Democrats as Musk’s “Sacramento Pay Pals.” As the Silicon Valley Business Journal reported, the Texas deal will see $85 million and 300 jobs flow into the Brownsville metropolitan area, among the nation’s poorest.

Economy

Similar criticism, however, has not attached to Perry’s creative approach to building the Texas economy. With Miller at the helm, the importance of California to that strategy is clear.

Notably, Miller isn’t the only California Republican putting down Texas political roots. In 2011, Texas became home to former Assemblyman Chuck DeVore, R-Irvine. An influential officeholder representing nearly half a million people, DeVore’s resume included time spent in the California National Guard and in the state’s aerospace industry. He was the model Republican to bail on his home state and make inroads in Texas.

Now, he’s Vice President of Policy at the Texas Public Policy Foundation. In an op-ed at National Review, DeVore summed up the rationale behind his reinvention simply: Just by looking at “the two states’ respective balance sheets,” it was clear that “Texas’s legislature is run by makers and California’s by takers.”

That’s a narrower pitch than many California Democrats will appreciate. But California Republicans in Texas exile don’t want a scattershot approach. They’ve already seen spectacular gains in attracting political and business talent.

Now, it seems, they’re refining their message and their outreach. If the buzz around Rick Perry continues to build, it’s likely  the governor will frame a new presidential campaign around the intriguing idea that Texas shows America what California could be — if it wasn’t run by Democrats.

This is supposedly reflected in the priorities of Gov. Rick Perry. A phone message I got expressed disbelief that I praised Texas public schools and called them broadly better than California’s. A male voice said something along the lines of … “Have you seen how little they pay for K-12? It’s obscene.”

That is not a good argument. In fact, it’s another argument for Texas.

It’s time to bring in Chuck DeVore, Orange County assemblyman turned Austin think tanker. DeVore suggests the National Assessment of Educational Progress (NAEP) is a good baseline to compare states. It measures fourth- and eighth-graders in math, reading and science and breaks down the results by the performance of white, Latino and African-American students.

So guess what happened in an analysis of the NAEP results for the eight biggest states? According to what Chuck wrote last year for the San Francisco Chronicle, it’s a rout.

“Looking at the most recent NAEP testing data for fourth and eighth graders in math, reading and science as well as looking at race and ethnicity and considering the eight biggest states, there are 24 categories to measure (e.g., eighth-grade science results for African American students, etc.). The 2009 results showed Texas as having the strongest scores in 11 of 24 categories while California was last in 15 of 24 categories. Further, Texas showed no areas of weakness compared to the national average.”

Texas makes case for Gloria Romero’s CA civil-rights argument

So Texas, the hellhole that pays obscenely little for K-12 education, stomps California — including specifically with the Latino and African-American students who are supposed to be oppressed in a Southern state like Texas as opposed to an enlightened state like California.

Gloria Romero is so right: The biggest civil rights issue in California by far is that the needs of the majority Latino students in our public schools are trumped by the needs of the largely white California Teachers Association and California Federation of Teachers.

In Texas, where teachers unions don’t dominate public education, Latinos do much better. That is not a talking point. As the NAEP scores show, it is the truth.

It should matter in the CA debate over education far more than it does. When you look at California’s actual deeds — not its rhetoric — our state government certainly celebrates ignorance far more than Texas.

By Katy Grimes

SACRAMENTO — Former Assemblyman Chuck DeVore, R-Irvine, left the Golden State for Texas in 2011 after he termed out. DeVore returned to his former state Friday night to speak at the dinner banquet of the California Republican Party Spring Convention in the state capitol.

Some saw him gloating over his decision to leave the state. Others saw him a recruiter for the Lone Star State.

Whatever DeVore’s role, the move he made has been very good for him, as he enjoys the benefits of living in a lower-tax, lower-regulation state.

Way back when …

DeVore harkened back to his first Republican convention in 1981. “Jerry Brown was governor,” he said, which got a big laugh from the audience. “Here we are in 2013, and Jerry Brown is once again governor. But the state of California is worse.”

DeVore said he was told to keep his speech optimistic, but admitted it would be a struggle, given California’s economic woes.

DeVore launched into the stats, facts and numbers to show the stark contrast between the beautiful but crumbling California and the economically thriving Texas — and why the Golden State can no longer rely on its stunning weather to attract and keep productive residents.

“In 1981, California was the eighth-most-taxed state,” said DeVore. “Today, California is the fourth-most-taxed state in the U.S., and that’s before the recent $50 billion tax increase” over seven years from Proposition 30, which voters passed last November.

DeVore said his decision to move to Texas was not made lightly. Prior to his first election to the Legislature in 2004, he worked in the aerospace industry in Southern California. “It’s been decimated since I worked in it,” DeVore said, as have many industries in California.

Just two weeks after leaving the  Assembly in Dec. 2010, DeVore announced he expected to run for Orange County supervisor in 2012. He instead dropped out of the race after he accepted a new job — in Texas. California Republicans were shocked.

Hired as a visiting scholar at the nonprofit Texas Public Policy Foundation, DeVore was tasked with writing about Texas‘ low taxes and regulations, and contrasting Texas’ business climate with other states. DeVore is now a vice president at the think tank.

While DeVore worked on a book on Texas as a model of prosperity, he found 2 million people had moved out of California “because of government.”

In California, 11.2 percent of all personal income goes to taxes, he said. In Texas, it’s 7.9 percent. “That’s a 42 percent difference! That is why people are fleeing,” he said. “They don’t just take it from you. Bureaucrats spend it on stuff. And they fine you or send you to jail.”

High cost of regulations: Who is making money?

In 2006, a study was done on the cost of regulations in California. DeVore said then-Gov. Arnold Schwarzenegger did not want to release it. But finally in 2009, when unemployment hit a 70-year high for the state, the California State University-Sacramento study came out.

DeVore said the study laid out how California’s energy policy led to the highest gasoline tax and the costliest electricity in the country. No wonder, he said, that “people will move out of California and go to Texas.”

DeVore said even Canadians have figured out how to profit off the state’s regulatory culture. “California imports a lot of electricity, but it has to be green,” said DeVore. “BC Power, in British Columbia, which got caught manipulating energy costs in 2001, exports hydroelectric power to California at a very high profit.”

But the irony is BC Power has to import its own electricity because of how much it sends to California — and it comes from power generated by coal from the state of Washington and the province of Alberta. The coal is cheaper — and in the big climate picture, its use negates California’s use of cleaner hydroelectric power. Meaning California’s policies achieved no actual reductions in greenhouse gases.

“The challenge for California is these policies lead to a higher cost of living,” DeVore explained. “Land use is  restricted in California. Housing costs 176 percent of the national average. The cost of living is 33 percent higher than in Texas. It’s a big deal. It means we have to pay a lot more to work here in California.”

California’s politically incorrect oil reserves

DeVore said he hears from many people the reason Texas is economically sound is “it’s all about the oil. If California had the oil Texas has …”

But California has a massive shale formation off of the coast of Monterey and underground in the San Joaquin Valley, which is home to at least 400 billion barrels of oil, he said. “This is one-half of the reserves in Saudi Arabia,” said DeVore. “But politics is preventing California from getting at the oil.”

State legislators don’t have the same appreciation of the private sector in California that they do in Texas. DeVore said his research found that in California, only 18 percent of Democratic lawmakers have a private sector background. In Texas, 75 percent of the lawmakers, all part-time legislators, come from the private sector.

“In California, [Democratic lawmakers] are mostly community organizers,” he said.

Poverty in the Golden State

“If California keeps raising taxes, we won’t see many Hollywood tycoons. They will leave,” DeVore said.

However, according to DeVore, it is the poor who are most affected by California policies.

A study after the 2012 election found California has the highest poverty rate in the country at 23.5 percent. “Do [the poor] benefit from high taxes, and high energy costs? Who benefits from things continuing as they are today?” DeVore asked.

He said the challenge is, “How do we communicate to people who would most benefit from our policies? California is still a bellwether state. It gave nation Ronald Reagan and Proposition 13. If we can get a few things right, it would herald a turnaround for America itself. That s how important it is right now.”

By Chris Reed

The war of words between Gov. Jerry Brown and his Texas counterpart, Rick Perry, over California’s business climate has led to the usual snide comments about the Lone Star State from the media annex of the Democratic establishment. The Fresno Bee’s editorial page comments are typical:

“Poor Texas. With its high dropout rate, lack of health insurance coverage, and wide economic disparities, the Lone Star State appears to be desperate, or least its governor is.

“How else to explain Gov. Rick Perry’s radio ads attempting to lure businesses from California?

“‘Building a business is tough, but I hear building a business in California is next to impossible,’ Perry says in the ad. ‘This is Texas Gov. Rick Perry, and I have a message for California businesses: Come check out Texas.’

“Yes, come check out Texas. Check out a state that ranks last in the percentage of its population with high school diplomas. Come check out a state that is last in mental health expenditures and workers’ compensation coverage. Come check out a state that ranks first in the number of executions, first in the number of uninsured, first in the amount of carbon dioxide emitted and first in the amount of toxic chemicals released into water.”

But now, as Paul Harvey would say, the rest of the story, courtesy of California lawmaker turned Texas think tanker Chuck DeVore. He destroys the idea that schools are inferior and poverty is higher in his new state:

“While California has more bureaucrats, Texas has 17 percent more teachers, with 295 education employees per 10,000 people, compared to California’s 252.

“The two states’ educational outcomes reflect this disparity. If we compare national test scores in math, science, and reading for the fourth and eighth grades among four basic ethnic and racial categories — all students, whites, Hispanics, and African-Americans — Texas beats California in every category, and by a substantial margin. In fact, Texas schools perform consistently above the national average across categories of age, race, and subject matter, while California schools perform well below the national average. …

“While California seeks more ways to tax success, it excels at subsidizing poverty. The percentage of households receiving public assistance in California was 3.7 percent in 2009, double Texas’s rate of 1.8 percent. Almost one-third of all Americans on welfare reside in California.”

Back to you, Fresno Bee. More snark! Less filling!

By John Seiler

Remember how, in the Proposition 30 campaign, Gov. Jerry Brown insisted the massive tax increases wouldn’t chase rich folks out of California?

Former California Assemblyman Chuck DeVore, who recently moved to Texas, has the numbers proving him wrong:

“What few know is that California enacted a two-year tax hike in February 2009 at the height of the recession. When that tax hike quietly expired in 2011, it was likely the biggest Tax Cut at the state level in history.

“Here’s where things get really interesting.

“Starting with the end of the recession in June 2009, there were 19 months where California had higher taxes followed by 23 months of lower taxes. Then, last December, small business owners’ taxes spiked back up. The employment data for this period speaks volumes. During the low-tax months, the number of jobs in California increased by 2.7 percent, the number of jobs in Texas increased by 4.3 percent and the number of jobs in the U.S. as a whole, minus the two biggest states, increased by 2.4 percent. So California did pretty well, slightly outpacing the national average.

“But, during the 20 months of higher taxes, California lost about 1.1 percent of its jobs while Texas, which held the line on spending instead of increasing taxes, added 1.2 percent more jobs while the other 48 states lost 0.4 percent of their jobs.

“So after the recession’s official end, California lost jobs at almost triple the pace of the rest of the nation when it had higher taxes but it gained jobs faster than the national average during the two years when its taxes were lower.”

Brown might reply that Arnold’s 2009 tax increase of $13 billion was more than double Jerry’s $6 billion. But Arnold’s was for only two years, whereas Jerry’s is for seven.

And Brown might add that Arnold’s tax increases hit all income groups, whereas the bulk of Jerry’s hits those making $250,000 or more a year. But the monetary impact will be the same: Rich people will have less money to invest in creating new businesses and jobs, or maintaining current ones.

Cost-of-living

DeVore also points out, “The cost-of-living is 42 percent higher in California than it is in Texas, most of that due to hyper-restrictive land use policies and fees that artificially drive up California’s housing costs.”

Thea means you only need to make $178,000 a year to live like someone making $250,000 a year in California.

Or you only need to make $72,000 in Texas to live like someone making $100,000 in California.

Of course, the weather isn’t as good. And your Texas governor can’t remember his own campaign platform, whereas in California your governor mangles the classics.

And because so many people are leaving California for Texas, DeVore reports:

“Renting a 20-foot moving van from Altadena, California to Austin, Texas costs $1,768. Going from Texas to California costs $656. U-Haul has to pay people to “dead head” empty trucks from Texas back to California to meet demand. In fact, some two million more Americans left California in the past 10 years than moved into the state. That’s a lot of empty-moving-van trips.”

But otherwise, life is much better in Texas. 

In his State of the State address, Gov. Brown insisted, “The message this year is clear: California has once again confounded our critics…. Against those who take pleasure, singing of our demise, California did the impossible.”

That’s true if you’re part of the government and will continue getting massive pay, perks and pensions — at last for now.

For the rest of us, it’s time for a bug-out plan.

By Wayne Lusvardi

Chuck DeVore’s timely new book, “The Texas Model: Prosperity in the Lone Star State and Lessons for America,” can be summed up in one riveting sentence by him:  “California taxes success, while Texas taxes the results of success.”

This not only sums up DeVore’s very readable explanation of what makes Texas’s prosperity different from California’s stagflation.  It sums up the DeVore family’s pilgrimage from Hudson Valley, N.Y. to Irvine, Calif. and to Dripping Springs, Tex., a bucolic semi-rural hamlet on the outskirts of the state capital of Austin.  Chuck is a retired lieutenant colonel in the California Army National Guard, a former aerospace executive and a former California assemblyman. He now is a senior fellow in fiscal policy at the Texas Public Policy Foundation.

Relocation, not retreat

DeVore is a self-described “numbers guy” who has a nose for the bottom line.  He was vice chairman of the California State Assembly Committee on Revenue and Taxation and has a degree in strategic studies from Claremont McKenna College.  His book is a combination of the numerical and the entrepreneurial.

DeVore is an entrepreneur for prosperity and liberty, as well as a hard-nosed analyst.  But his book is not Texas “boosterism” or a disgruntled rant about the deterioration of the “California Dream.”  The book can be useful for elected decision makers, educated voters wanting to find a new model for California, or those contemplating relocating to Texas.

As DeVore writes, “People don’t casually vote with their feet” to leave their native home.  He explains that some of the data shown in the book were used for him to make a decision whether to transplant his family in Texas or not.  DeVore’s migration was not because of a fad or only a protest to what is happening in California.  He explains it as a decision based on a convergence of hard economics and his value system of prosperity being the residue of liberty.

DeVore cannot be typecast as an ideological refugee, seeking asylum behind the walls of the Alamo.  He’s a military man and a fighter who had to relocate his family for economic and personal reasons.  DeVore had to find a place to relocate his wife’s elderly parents from rural New York, two teenage children and his cancer-survivor wife.  His former modest home was unable to accommodate all of them given Irvine’s high real estate values.

Texas model: Tax incentives for business and job formation

The core of DeVore’s book is a comparison of two hypothetical small businessmen in San Diego and Dallas in his chapter “Tax a Little, Get a Lot.”  DeVore shows what happens when each makes $100,000, $125,000, and $200,000 gross income in California and Texas.

Comparison of California and Texas Business Tax Rates

At $100,000 gross income, both businessmen are taxed about equally in both states.  At $125,000, Texas shows a slight tax advantage.  But if a businessman takes more risks to boost his income to $200,000, the Texas businessman sees no additional state taxes.  On the other hand, the Californian sees his “income tax bill go from $2,491 to $11,655, a tax increase of 368 percent on an income increase of 143 percent.”  Texas not only preaches a prosperity ideology, it rewards it; while California overtaxes jobs and wealth creation.  As they say in the business world, a valuable product sells itself without much need of advertising.

However, DeVore isn’t content with just Chamber of Commerce boosterism.  He answers critics that contend Texas owes its vitality to oil and low wages, lighter environmental regulations leading to air pollution, insufficient affordable housing, medical care inadequate for the poor, subpar education and a safety net full of holes.  In each case, DeVore’s statistical reply to the critics of Texas’ economic model is devastating and convincing.

Personal observations about California vs. Texas models

As someone who assisted an 82-year-old lady to relocate from upscale San Marino in Southern California to her hometown of San Antonio, Tex. this past year, I have some observations of my own to add to what makes Texas prosperous and California’s economic model ultimately doomed.

As a former real estate appraiser, I observed that Texas doesn’t overinvest its family in real estate, especially residential homes.  Home values in Texas are about half those in California’s for homes of similar size and quality in equal neighborhoods. As such, Texas has more stable capital to invest in family and business formation and a more stable tax base.

Texas is able to do this because it doesn’t have California-style growth management policies such as city annexation commissions, mandated environmental impact reports and lawsuits, general plans and housing element plans, open space preservation, the California Coastal Commission, the Lake Tahoe Regional Conservancy and the Tahoe Regional Planning Commission.  Houston doesn’t even have zoning and instead uses neighborhood covenants.

What makes our state “California” is its image of ever-increasing home values.  This is often captured by the popular phrase, “You can’t go wrong buying land or homes in California because the prices always go up in the long run.”  And the reason they seem to always go up is because of California’s unique blend of growth controls, environmental land use regulations and Proposition 13. Although Prop. 13 limited tax increases on homes, in doing so it made home investment more profitable than the other, highly taxed sectors of the economy.

Combined with the political mania for affordable housing incentives — low interest rates, low down payments, and mortgage interest tax deductions — these factors produce home-price bubbles and busts.

The bubbles inflate home prices way beyond what family incomes can afford. This leads to NIMBY — “Not In My Backyard” — behavior to protect property values as personal fortunes.  It also leads to families using built-up home equity from inflated price appreciation as collateral for business loans or unsustainable luxury lifestyles.  But when the home equity goes “poof” during a real estate bust, what results is foreclosures, upside down mortgages, business closures and busted government budgets. Maybe architect Frank Lloyd Wright was accurate when he described California as a giant pinball machine that leads to government “casino” budgeting.

Toxic mix

But with this toxic mix of land use regulations and affordable housing incentives comes booms and busts that break state and local government and school district budgets that become addicted to the accompanying inflated property taxes.

Real estate bubbles have created the “California Dream.”  But they have also created its economic nightmare.  Texas’ “prosperity model” is based on lower tax rates on businesses that produce jobs and realistic real estate values tied to family incomes.  California punishes job-creating businesses and over-inflates home prices beyond what most families can afford.  I can attest that there is more affordable market-rate housing in upscale areas of Texas than in California.

The ultimate “dream” of California’s political Progressives is to get rid of Prop. 13, which allows property tax increases above 2 percent a year only when houses resell, instead of on an annual reassessment.  But if growth controls are also not deregulated at the same time, it will lead to a gigantic economic disaster that would likely trigger another state, maybe even national, depression.

Check out DeVore’s book for a contrast with how things are done in California — and a path toward better policies for the Golden State.